The current level of interest rates can lead clients to question whether an annuity continues to offer the best solution for their hard-earned pension pot. While this concern is understandable, annuities still offer a solid combination of low risk and the lifetime guaranteed income. In addition, many people are not aware that they might qualify for an enhanced annuity which could increase their income by a significant amount.

ABI research shows that nearly half of all retirees qualify for an enhanced annuity on the basis of their health, yet only about one in five1 actually applies.

Yesterday’s fine on Lloyds underlines what IFAs have known for years. Bank “advisers” have been the cutting edge of a gigantic boiler room scam perpetrated by the bancassurance nightmare of the last 20 years.

Reading the decision notice is truly shocking. Incentive schemes were designed to drive product sales with a passing nod to quality and no consideration of treating customers fairly. Given that, post Northern Rock, the FSA poured huge resources into “enhanced” supervision, surely we are entitled to ask why it took so long for these things to be discovered and stopped?

If, as reported, Sesame decides to abandon independence within its network, it will be a sad day for a business which until recently claimed to be a standard bearer for independent advice. That said, all businesses need to offer a proposition which enables them to be profitable and Sesame are perfectly entitled to become restricted, whatever the driver for that may be.

In turn, Sesame customers are also going to be faced with some tough choices and some soul searching about the proposition they offer to their clients. Is independence possible within a network? Do my clients need independent advice? What will my professional connections think?

Firstly, my advice would be to take some time to properly consider the choices.

Most Sense members will be aware by now of the SRA’s decision to “liberalise” referrals from solicitors to financial advisers, so that solicitors can now refer some clients to “restricted” advisers post-RDR. You may also have seen that the Law Society has recommended that solicitors ignore the new SRA rule and carry on as they always have – referring clients only to independent advisers. There has also been some talk of a judicial review of the decision of the SRA Board. So what on earth is going on and what will happen next. Well ….

Every day I seem to read another article about the advice profession which blindly refers to segmentation as the key to the future IFA practice. At the risk of flying in the face of accepted orthodoxy, I am going to argue that this is a gross over complication of what is a simple exercise in commercial management.

Historically, many advisers have been happy to advise clients based upon the sure knowledge that the total amount of commission earned would provide a good income after costs have been deducted. Post RDR advisers will need to have a plan to deal with those clients whose fees do not cover the cost of giving advice. As I see it there are 3 simple choices:

When I started working in a bank 35 years ago, I was taught that the priority was to provide a great service to the bank’s customers. There was no pressure to “sell” extra products and any applications to borrow money were analysed carefully. The thought that an officer of the bank could sell a product which was unsuitable was just unthinkable.

So where did it all go wrong? Over the succeeding 2 decades, there has been an inexorable process of commercialisation. Profit growth, return on capital and executive remuneration became the new alters upon which bankers worshipped and this has fundamentally corrupted the banking profession.

If the love of money is the root of all evil then today’s banks are egregious examples of that statement.

Over recent years, the word risk has become an ever present business issue. At its simplest, the dictionary defines risk as the possibility of suffering harm or loss. In our regulated world, there can sometimes appear to be so many ways of measuring and managing risk and so many people willing to help us do it.

But there is one profession whose raison d’etre is the identification and quantification of risk and that is the insurance industry. They maintain a close working relationship with insured businesses, have robust processes and an appetite to take risk in return for a reward. The UK has a proud and successful history of insuring the world’s great trading businesses and a level of expertise that is the envy of many countries.

I see that the trade press has finally picked up on a case where a PFS member has been disciplined under the Ethics code for excessive alcohol consumption and aggressive behaviour at a PFS event.

There have been over 50 comments added to the story and reading them is a fascinating insight into the attitudes and approach of our profession. The views expressed range from outrage at the action to total support for the PFS.

Last week, I looked at the “advice gap” and why providers will increasingly see this as an attractive channel to complement their intermediated strategy.

As we approach RDR, professional adviser firms are putting the finishing touches to their customer proposition and pricing. So what is the best way to service clients with simple needs or where the cost of giving advice is not covered by the fee collected?

It has always been true that advisers have provided advice to clients where the commission does not cover the cost of the advice. Does this make sense in the future? Some advisers will set out a minimum fee for their service and some will set out a minimum investment before they will provide advice.

As RDR has developed, learned commentators have predicted that there would an advice gap, created by IFAs moving upmarket. Many also predicted that this would see the return of the insurance company direct salesforce.

But so far, this simply has not happened. The Man from the Pru has re-appeared but only to service the orphan clients from the original salesforce. As I write this article, I see little likelihood that any insurer will take the risk of launching and then managing any kind of advised distribution channel. I say this for two main reasons; firstly that they lack the risk appetite for giving advice and secondly, that they also see that the economics of a single tie focused on lower value clients cannot ever be positive.